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Some Positive Signs For Silver ETFs

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The iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest exchange traded funds backed by holdings of physical silver, have traded flat over the past few days, but signs are emerging commodities investors are warming to the white metal.

Unlike gold and palladium, silver has had a significantly more lackluster performance over the past few years. After peaking around $50 an ounce back in 2011, just shy of the $50.35-an-ounce intraday record hit in January 1980, the metal has been trading in a much more narrow range over the last few years, between roughly $14 to $20 an ounce.

“Silver’s demand is picking up with the metal seeing the largest daily ETF inflow over the past year, says BMO Global Commodities Research,” reports Kitco News.

Year-to-date, SLV is lower by 1.38% and resides more than 6% below its 52-week high.

High Hopes For Silver

A more accommodative Federal Reserve would bolster the case for silver. Looking ahead, silver and other precious metals may continue to face an uphill struggle as the Federal Reserve is expected to keep hiking interest rates, which makes non-yielding assets like commodities less attractive.

“While gold ETF flows have hit the headlines over the past month, over the past week silver has seen a larger net positive change. In particular, yesterday saw the largest single daily inflow over the past year at 5.55m oz,” writes BMO Capital Markets managing director of commodities research Colin Hamilton,” according to Kitco.

Investors can tap silver equities with the Global X Silvers Miners ETF (NYSEArca: SIL) and related ETFs. SIL, the largest silver miner-related ETF, tries to mirror the Solactive Global Silver Miners Total Return Index, which is also comprised of global silver miners. Silver miners have been outperforming the metal. Over the past month, SIL is up 11%.

“With gold having priced in potential rate cuts extremely quickly, we view silver as the catch-up trade at present, particularly if retail investors help to lift bar and coin demand,” Hamilton says, notes Kitco.

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